Another nail in the coffin of 401k fees was just hammered in. The Supreme Court has ruled that lower courts cannot easily dismiss 401k fees lawsuits, as they have in the past. This is big news for people who follow the ultimate fate of 401k fees. This recent ruling is another dramatic indication that 401k fees are on the losing side of economic history. The current order puts massive new levels of pressure on 401k plan fiduciaries, who are typically the persons that are the leading targets of excessive 401k fee lawsuits.
The Supreme Court’s “anti-401k fees” ruling supports lower court lawsuits that target plan fiduciaries for breach of their responsibilities. These fiduciaries who are being sued are, it is alleged, not properly monitoring 401k investments or putting a critical eye on 401k fees.
It is important to remember that self-directed 401k accounts in brokerages such as Charles Schwab essentially shield fiduciaries from these lawsuits. Under the self-directed 401k format, employee-participants make their own investment selections from thousands of investment choices. In this day and age, is this absurd that all 401k plans do not offer self-directed accounts to 401k plan participants. It seems like a no-brainer—If companies let their employees have control over their retirement savings, hidden and not-so-hidden 401k fees cannot be as easily skimmed from participants’ retirement savings by financial advisors and their partner 401k recordkeepers.